2022 already holds a vast amount of potential for deep tech. We’ve already felt the positive outcomes from the surges of innovation that have been taking place in artificial intelligence (AI), synthetic biology, nanotechnologies, and quantum computing, among other advanced technologies (Source, BCG, 2021).
With this in mind, it’s clear to see that technological advances have been bridging the gap between lab conception and marketplace at an increasing pace – a development which we can attribute to more and more companies forming with the pursuit of applying these technological advances to the marketplace. Benjamin Joffe, partner as SOSV, says increasing funding “will help startups overcome the multiple transitions they have to make from lab to market.” (Source Sifted, 2022)
Furthermore, investors believe that 2022 will be the “year of deep tech” with many more VCs seizing the opportunity to fund startups (Source, Sifted, 2022). Take the Swedish battery maker Northvolt as an example – having garnered sizeable investment from huge companies like Volvo and VW, they’re now able to build ‘gigafactories’, and even ideas like Energy Vault (storing grid energy as huge piled-up concrete blocks) that may have seemed far too eccentric a few years ago are starting to get real investment (Source, Sifted 2022).
The question is, why do these ventures attract investment? What most successful deep tech ventures have in common can be boiled down to a few key attributes. The first is that they solve a problem: Successful deep tech ventures tend to have a clear goal in mind that addresses a prevalent, and fundamental issue. This is made clear by the fact that 97% of deep tech ventures contribute to at least one of the UN’s sustainable development goals (Source, BCG 2021).
Secondly, deep tech ventures use more than one technology. In fact, 96% of deep tech ventures use at least two technologies, and 66% use more than one advanced technology (Source, BCG 2021). About 70% of deep tech ventures own patents in their technologies (Source, BCG 2021). All of this goes to show that they are constantly on the brink of innovation, leveraging what they have at their fingertips to reach out towards seminal developments.
Finally, deep tech ventures sit at the centre of an incredibly deep ecosystem, with support from thousands of universities and research labs. It is estimated that some 1,500 universities and research labs are involved in deep tech, and deep tech ventures received roughly 1,500 grants from governments in 2018 alone (Source, BCG, 2021).
So, having outlined the key characteristics of why deep tech ventures are growing in success at such a rapid rate, this begs the question: What will 2022 bring for the world of deep tech? Expert predictions dictate that quantum computing, fusion energy, and healthcare will play an important role.
2022 will be the year where we see the first companies in quantum computing demonstrate that their solutions have useful applications in society as a whole. One area where quantum computing will help is its ability to significantly improve the efficiency of electric batteries. This is because quantum computing can solve key problems in modelling battery materials that are simply beyond the reach of standard computers, thus unlocking batteries with higher performance and lower costs.
Another area is cyber security and cryptography. Given the continuous growth of the online world, with that comes the increased risk of cyber-attacks, which happen across the globe on a daily basis. Whilst companies are beginning to realise the importance of establishing more robust security measures in the digital infrastructure of their organisations, the process is becoming daunting and impractical for classical digital computers. With the aid of machine learning, quantum computing can help in developing a variety of new cyber security frameworks to combat these threats at a faster pace, as well as helping in creating encryption methods, also known as quantum cryptography.
With the significant capital being invested in quantum computing, we are likely to see more seminal applications in 2022 as innovation in hardware and software starts to accelerate. Moray Wright, CEO of Parkwalk Ventures claims that “2022 will be the year when government-backed financing really takes off” – especially as governments in the West begin to learn more about the vast potential applications of quantum computing (Source, Sfited 2022).
For more than 70 years now, the gigantic energy-generation potential of nuclear fusion has attracted physicists, governments, oil and gas giants, and entrepreneurs the world over. However, even though nuclear fission plants have been generating electricity around the world since the 1950s, nuclear fusion has never become viable – but is that about to change?
Investors are starting to pay attention to nuclear fusion startups now, with US-based Commonwealth Fusion Systems raising more than $1.8bn in Series B funding led by Tiger Global. In Europe, nuclear fusion research has been centred around the long-running ITER mega-project in the south of France, but now there are younger startups emerging like Renaissance Fusion in Grenoble, and Marvel Fusion in Munich that is leapfrogging this with new approaches.
One company, in particular, that is making huge strides in this regard is TAE – located in the leafy Foothill Ranch, southeast of LA. They have raised over $880m in private funding (Source, BBC, 2022), with high-profile backing from Goldman Sachs, the Rockefeller family, and the late Paul Allen, co-founder of Microsoft. Google has even lent the firm its expertise in machine learning in order to help accelerate the timeline for fusion by optimising the fusion device. The rate at which machine learning has accelerated allows TAE to reconstruct the events that occur during a fusion experiment, or “shot”, allowing them to make changes much more readily as multiple strands of data can be quickly pulled together for a deeper understanding of the process.
We’re already familiar with the term ‘Industry 4.0’ as being the ‘fourth industrial revolution’ relating to the massive strides that manufacturing, production, and related industries have taken as a result of digital transformation and new technologies. Looking at the year ahead, it is highly likely that biology and technology will unite in deep tech companies and see engineering and computer science principles applied to biological problems.
For instance, companies such as Foundation Medicine are known to develop, manufacture, and sell genomic profiling assays based on next-generation sequencing technology for solid tumours, hematologic malignancies and sarcomas, in the name of developing what can be described as ‘precision medicine’. Moreover, they are also able to partner with firms within the biopharma industry to help discover, develop, and distribute the next breakthrough treatments for patients, ultimately matching patients to specific and targeted therapies, immunotherapies and clinical trial options (Source, Mathys & Squire, 2022)
This kind of development can also be coupled with the potential for enhanced diagnostics for better treatment decisions. Companies such as Brainomix specialise in the creation of AI-powered imaging biomarkers that enable precision medicine and ultimately lead to more accurate diagnosis, potentially unlocking faster treatment times (Source, Mathys & Squire, 2022).
Of course, as with many deep tech companies, those involved in Biology 2.0 are very IP rich, which means they will often need significant capital investment before they can begin generating revenue. However, once the investment has been raised, progress can be very significant and will result in increasing the throughput of labs, from simple upgrades to the way data is collected, recorded and shared through to transforming the benchtop equipment itself with more flexible hardware.
All of these developments are incredibly exciting. Deep tech is proving its innate potential and ability to transform many of our industries, seamlessly integrating into one organisation to the next and completely reshaping the way we innovate and develop new technologies. Investors are clearly beginning to realise the vast planes of potential that exist within deep tech, as well as its breadth of application across industries, thus showing an increased eagerness to speed up the process of innovation through investment into groundbreaking new startups at the brink of innovation.